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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
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Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner.
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Backed by the U.S. Department of Agriculture, USDA home loans are available to borrowers in certain rural areas. If you’re in an eligible area, you could qualify for this special no-down payment mortgage, provided your income falls within the program’s criteria. Here’s how to know if you’re eligible, and how to apply.
The USDA backs several mortgage programs, including the Single-Family Housing Guaranteed Loan Program (sometimes known as Section 502 Guaranteed), which assists USDA-approved lenders with providing 30-year, fixed-rate financing to low- to moderate-income homebuyers in specially designated rural areas.
The key benefit of USDA loans: You don’t have to make a down payment — you can receive up to 100-percent financing for the purchase or construction of a home. Unlike other types of mortgages, there are also no limits on the amount you can borrow.
The downside: There are guarantee fees when you close the loan and again annually for the duration of the loan’s term. The upfront fee equals 1 percent of the loan (the amount you borrowed); the annual fee equals 0.35 percent. While these fees are charged to your lender, in most cases, they’ll be passed onto you as the borrower.
While the program’s name includes “Single-Family,” the home can actually be a detached or attached property, a condominium, a home in a planned unit development (PUD) or a modular or manufactured home.
In addition to the Guaranteed program, the USDA offers other home loan programs, including:
USDA loans are also eligible for refinancing.
To qualify for the USDA Guaranteed program, you must:
If you meet the USDA loan qualification criteria and you’re ready to buy a home, here are next steps:
Here’s the current list of USDA lenders by state. (If you’re planning to build a home, here’s the current list of USDA construction loan lenders.) The biggest USDA lenders include:
Many USDA loans come with below-market rates, but it’s still worthwhile to compare costs — aim to compare at least three lenders.
For a preapproval, be prepared to provide information about your financial situation, including assets, debt and income, as well as employment history. Here’s more on the difference between prequalification and preapproval.
Once you find an eligible home you like, make an offer. If it’s accepted, you’ll sign the purchase agreement with the seller, provide any initial earnest money deposit and move on to applying for your mortgage.
This might already be mostly filled out based on the information you provided when you got preapproved.
As your loan application is processed, be ready to answer any questions from your lender. During this time, you’ll also obtain a homeowners insurance policy and prepare to pay closing costs.
Be careful not to make any changes to your credit or finances, such as buying a car or taking out a new credit card, during underwriting. If you do, your lender might need to restart the underwriting process, which could delay your closing.
If all goes smoothly, you’ll be cleared to close. On closing day, you’ll sign the mortgage note and other paperwork and get the keys to your new home.
Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.
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